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Centre Number Candidate Number www.studyguide.pk Name CAMBRIDGE INTERNATIONAL EXAMINATIONS General Certificate of Education Advanced Subsidiary Level and Advanced Level 9706/02 ACCOUNTING Paper 2 Structured Questions (Core) October/November 2003 1 hour 30 minutes Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your Centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen in the spaces provided on the Question Paper. You may use a soft pencil for any diagrams, graphs or rough working. Do not use staples, paper clips, highlighters, glue or correction fluid. Answer all questions. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. You may use a calculator. If you have been given a label, look at the details. If any details are incorrect or missing, please fill in your correct details in the space given at the top of this page. Stick your personal label here, if provided. For Examiner’s Use 1 2 3 Total This document consists of 12 printed pages. SP (NF) S42578/2 © CIE 2003 [Turn over www.xtremepapers.net www.studyguide.pk For Examiner’s Use 2 1 The Gala Golf Club’s accounts included the following balances. at 31 December Fixed assets (net book value) Amounts owed by the Club Wages – maintenance staff – café Electricity Rent Creditors – maintenance – café Stock – café Subscriptions due and unpaid 2001 $ 85 600 2002 $ 119 680 2 060 760 220 1 440 3 040 760 420 31 800 2 500 840 260 1 640 4 200 700 370 33 200 20% of the cost of electricity and rent is charged to the café. The Receipts and Payments Account for the year ended 31 December 2002 was as follows. Balance b/d Café takings Subscriptions Sale of grasscutter $ 32 400 110 800 313 600 2 000 _______ 458 800 ______ _ Wages – maintenance Wages – café Equipment Fixtures Maintenance Electricity Rent Purchases for café Balance c/d $ 102 800 42 400 66 000 26 000 94 200 19 000 65 600 38 600 4 200 ______ _ 458 800 _______ ______ _ The grasscutter had been bought in 1999 for $4 000. Depreciation is calculated at 20% per annum on a straight line basis and is applied in the year of purchase but not in the year of sale. Show all workings. REQUIRED (a) Calculate the Accumulated Fund at 1 January 2002. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ......................................................................................................................................[4] 9706/02/O/N/03 www.xtremepapers.net www.studyguide.pk For Examiner’s Use 3 (b) Prepare the Café Trading Account for the year ended 31 December 2002. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... 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.......................................................................................................................................... .......................................................................................................................................... ......................................................................................................................................[4] 9706/02/O/N/03 www.xtremepapers.net [Turn over www.studyguide.pk 4 (c) Prepare the Club Income and Expenditure Account for the year ended 31 December 2002. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... 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.......................................................................................................................................... ......................................................................................................................................[9] 9706/02/O/N/03 www.xtremepapers.net For Examiner’s Use www.studyguide.pk For Examiner’s Use 5 (d) Prepare the Club Balance Sheet as at 31 December 2002. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... 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.......................................................................................................................................... ......................................................................................................................................[5] (e) (i) State two accounting methods of treating donations received by the Club. ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ...............................................................................................................................[4] 9706/02/O/N/03 www.xtremepapers.net [Turn over www.studyguide.pk 6 (ii) Distinguish between a Receipts and Payments Account and an Income and Expenditure Account. ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ...............................................................................................................................[4] 9706/02/O/N/03 www.xtremepapers.net For Examiner’s Use www.studyguide.pk 7 2 Dougal and Florence, who have been in partnership for many years, decided to retire and dissolve the partnership on 30 September 2003. Profits and Losses were shared in the ratio of the partners’ Capital account balances, which were fixed at Dougal $80 000 and Florence $40 000. The partnership Balance Sheet at 30 September 2003 was as follows. Fixed assets (net book values) Buildings Fixtures and fittings Motor vehicles Current assets Stock Debtors Bank Current liabilities Creditors $ 104 000 35 000 26 000 ______ _ Capital accounts Dougal Florence Current accounts Dougal Florence Loan from Dougal 80 000 40 000 ______ _ 14 430 (2 580) ______ _ 10 500 17 230 950 ______ _ $ $ 165 000 28 680 9 230 _____ 19 450 ______ _ 184 450 _______ 120 000 11 850 52 600 ______ _ 184 450 _______ The partnership ceased trading on 30 September 2003 and the assets were realised as follows. Buildings Fixtures and fittings One motor vehicle The remaining motor vehicle was taken by Dougal at an agreed valuation of Stocks $ 100 000 37 000 15 000 9 500 5 200 All debts were collected and banked except for bad debts totalling $900. Discounts allowed amounted to $200. Creditors were paid in full. Dissolution expenses of $1200 were paid by cheque. Dougal’s loan was repaid from the bank account. Partners’ Current account balances were transferred to their Capital accounts. 9706/02/O/N/03 www.xtremepapers.net [Turn over www.studyguide.pk 8 REQUIRED Prepare the following accounts for the month of October 2003. (a) Dissolution (Realisation) account. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ......................................................................................................................................[8] (b) Partners’ Current accounts, in columnar form. 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.......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ......................................................................................................................................[4] 9706/02/O/N/03 www.xtremepapers.net For Examiner’s Use www.studyguide.pk For Examiner’s Use 9 (c) Partners’ Capital accounts, in columnar form .......................................................................................................................................... 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......................................................................................................................................[8] (e) Discuss three problems which may arise in a partnership but would not occur in a limited company. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ......................................................................................................................................[6] 9706/02/O/N/03 www.xtremepapers.net [Turn over www.studyguide.pk 10 3 Darnick Holdalls Ltd manufacture three types of high quality hand-made cases, Small, Medium and Large. These are manufactured in two departments, the cutting department and the stitching department. There are also two service departments, maintenance and canteen. The estimated data for the year ending 31 December 2004 is as follows. Small 10 000 3 Estimated production (units) Machine hours required per unit Unit selling price Unit prime costs Direct materials Direct labour – cutting department Direct labour – stitching department Medium 9 000 4 Large 4 400 5 $ 125 $ 140 $ 155 30 17 5 35 18 6 40 20 7 Estimated overheads for the year ending 31 December 2004 Cutting Stitching Space costs Depreciation of Equipment Allocated overheads $44 200 Additional information Floor area (sq metres) Number of employees Cost of equipment 5 000 12 $700 000 Maintenance Canteen Total $90 000 $200 000 $124 800 _______ _ $414 800 ________ $47 600 $15 000 $18 000 6 000 9 $850 000 2 000 4 $250 000 2 000 5 $200 000 REQUIRED (a) Use the grid below to prepare an overhead analysis sheet for the year ending 31 December 2004 detailing overheads for the cutting and stitching departments. Canteen costs are shared among all the other departments on the basis of number of employees. Maintenance costs are shared between the production departments on the basis of 70% to stitching and 30% to cutting. Overheads Cutting $ Stitching $ Maintenance $ Canteen $ [17] 9706/02/O/N/03 www.xtremepapers.net For Examiner’s Use www.studyguide.pk For Examiner’s Use 11 (b) Calculate the overhead recovery rate for (i) the cutting department, based on direct wages; (ii) the stitching department, based on machine hours. Show all workings. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ......................................................................................................................................[6] (c) Give reasons for the two different methods used in (b). .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ......................................................................................................................................[2] 9706/02/O/N/03 www.xtremepapers.net [Turn over www.studyguide.pk 12 (d) Calculate the total unit cost of one Medium case. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ......................................................................................................................................[5] 9706/02/O/N/03 www.xtremepapers.net For Examiner’s Use
